And yet, for some reason, we see houses listed every day that don’t have one!
In this real estate climate, you catch more flies with honey. And by not providing a pre-home inspection for prospective buyers, a seller would be pushing some buyers away, and possibly leaving money on the table…
I’ve long maintained that there is a “right way” to list properties for sale in the city of Toronto, and then there is every other way that Realtors use.
I believe that you get one chance to make a first impression on the market and its participants (buyers, sellers, agents, inspectors, etc), and that a property should never be listed on a whim, half-assed, or without the necessary preparation.
I believe that the preparation can take anywhere from two weeks to two months, whether it’s a house or a condo, new or old, east or west, expensive or cheap.
There’s a way to list real estate for sale that will help attain the maximum amount of money possible, and yet maybe 20% of all listings I see follow this time-tested and proven process.
Today, I want to talk about one of the necessary facets of a real estate listing, which is often left undone: The Home Inspection.
When I list a home for sale, I always conduct a pre-home inspection, and I leave the inspection on the dining room table, along with a stack of photocopies of the entire inspection. I also upload the inspection to MLS as an attachment, and email a copy to every agent who shows the property.
Why wouldn’t I?
The way I see it, we’re in a real estate climate where multiple offers are the key to getting the highest price for the property. You need more than one buyer to come to the table at the same time, and thus you have to do everything possible to appease the entire buyer pool.
As I said – we can talk about marketing, or listing strategies another day.
It’s the home inspection that’s on my brain right now, as I’ve seen a slew of properties in the past few weeks listed without conducting a pre-home inspection.
Consider this: the buyer pool for each listing is, theoretically, 100%. That number gets whittled down, down, and down, depending on the buyers’ preferences, the sale process, and the property itself.
Your goal, as a listing agent, is to satisfy as much of the buyer pool as possible, and keep them interested, focused, and above all – ready and willing to act.
Many buyers in Toronto have no problem purchasing a property without doing a pre-home inspection, although many don’t feel the same way.
So for those buyers must see an inspection in order to make an offer, there’s two ways for them to be satisfied:
1) A pre-home inspection has been done by the seller
2) The buyer has to shell out $400-$600 for the inspection, before offer night
It’s #2 above that presents problems for many buyers, and as a result, can present a problem for the seller who is trying to solicit multiple offers and top dollar for the property.
Because many buyers either don’t want to spend $400-$600 for a home inspection on a property that they have no guarantee of getting (ie. they could lose in multiples on offer night), or don’t have the time necessary to conduct one. If you saw a house on Sunday that was taking offers on Monday, and there was no pre-home inspection conducted by the seller, you probably don’t have the time to mull over the property and hire a home inspector.
So all this is leading up to the burning question: why in the world wouldn’t a seller, or the listing agent, complete a pre-home inspection?
I honestly have no idea.
I suppose their are two obvious answers:
1) The listing agent is cheap. I’m a full service agent, and I work for a full service brokerage. I spend money on my listings, as it’s the only way I know to sell real estate. But many other agents don’t feel the same way, and maybe $400-$600 is too rich for their blood. Maybe these are discount agents who are working for less, and thus they’re cutting out the services to make up for their lost income.
2) The listing agent is clueless. I really think that this point trumps the first one, as many agents might not think it’s necessary to provide a pre home inspection.
Keep in mind – I’m talking, for the most part, about houses that are listed with a set offer date, and multiple offers in mind. If you’re thinking about that house that’s been listed for 107 days with no price reduction by an agent from Vaughan, then we’re not having the same conversation. I’m talking about a properly-listed house, with a set offer date, that is going to attract multiple offers.
Why wouldn’t you provide a pre-inspection?
I can speak from experience and say that when I’m taking my buyers around, and 8/10 properties have pre home inspections sitting on the kitchen counter, they get a funny feeling from those 2/10 that don’t.
Maybe they feel as though the house has something to hide, or maybe they start to associate the property with a lower price point, and see it in a lesser regard.
Of course, then there’s the case of an imagination run wild, especially for a nervous first-time buyer, who assumes, “If they didn’t do a pre home inspection, there MUST be something to hide!”
The truth is, a home inspection rarely ever identifies some catastrophic deal-breaker that might have cost hundreds and hundreds of thousands of dollars. Usually, a home inspection identifies issues like a 25-year-old furnace that will need to be replaced, a couple of live knob-and-tube wires that are left over, a faulty exhaust fan in the bathroom, a clogged air return that restricts proper ventilation, etc. None of these items are a deal breaker on their own, but enough of these together, very well could be.
I tell my clients, “A home inspection is an investment in your house. The inspector will identify 15-20 things you could do to improve the efficiency of the house, and other preventative measures, such as upgrading attic insulation, caulking around the basement window-well, etc. Your home is an investment, so having a knowledgeable professional teach you the inner workings as well as demonstrate a few simple fixes is money well spent.
So why not have a pre-home inspection done? I really don’t know.
There’s nothing to lose, and everything to gain – for the seller, that is.
I think some sellers just don’t understand the process. Some sellers are so naive that they think an inspection has a “pass” or a “fail,” when that’s only the case on TV. Maybe the sellers fear that the inspection will identify an issue that will turn buyers away, but that rarely happens either.
The sellers who don’t provide a pre-home inspection have it completely backwards.
They fear that by providing an inspection, they’ll turn buyers away. When in fact, if they don’t provide an inspection, they’ll turn buyers away.
Nevertheless, I think the blame falls squarely on the listing agents for not providing their sellers with better advice. After all, why hire an agent to sell your home anyways? Aren’t they supposed to KNOW what to do in order to get top dollar?
Take a situation where a house doesn’t have a pre-home inspection, and gets two offers on offer night. I’m willing to bet that if the house DID have a pre-home inspection, they’d have got three or four offers, no problem. There’s always those couple buyers who walk away as they either don’t want to shell out the money for an inspection, or don’t trust a house that doesn’t have one.
And the situation above isn’t fictional – it’s something that happened last week. And if you asked me again in a month, I’d show you four or five other situations exactly like it.
Times have changed, and so too has the market, and the process of selling. If your dad says, “Why would you EVER highlight the faults and problems of your home by providing an inspection to the buyers?” then consider that your Dad, sorry to say, doesn’t understand current market conditions.
Darren
at 9:40 am
As a buyer a pre inspection is absolutely meaningless. I’m going to assume it’s done in favour of the seller in some way.
Sorry David I’ve met far too many suspect real estate agents to trust anything they tell me. I’ll do my own inspection thank you.
David Fleming
at 1:39 pm
@ Darren/Jeff/Ian
I have to respectfully disagree.
I’ve had this question posted to me a few dozen times by buyers, and I’ve always said the following: “A reputable home inspector will not risk his or her career or reputation to ‘fudge’ the inspection for the seller who is paying for it.”
There’s no way that an inspector with 10-20 years experience is going to find mold or termites, and then figure, “Well, the seller is paying for this, so I’d better do right by them and NOT disclose this.”
I’m sure it’s happened before, and it was written about in the newspaper, but it’s not like this happens every day.
The point of my article is that whether you trust the seller’s home inspection or not, there is absolutely no point in the seller NOT having one. They’re just shooting themselves in the foot, and getting less money for the property.
Darren
at 3:57 pm
What qualifies as a “reputable home inspector”?
I believe it was marketplace that did a show on them and found all many (most?) of them missed all sorts of crucial issues.
If there was more accountability and some sort of warranty/guarantee behind the inspection then I’d be on board with you David. While I don’t doubt that YOU hire good people, if I’m a buyer I don’t know who the hell you (the sellers agent) are, who the sellers are or the inspector is. I can’t trust anything you tell me or an inspector tells me on your behalf.
Ian
at 9:47 am
Ditto Darren. In my buying process, I always assumed that the smart thing to do was to not rely on the seller’s pre-inspection, and get my own inspection anyhow irrespective of whether there was a pre-inspection. The only time I didn’t get one (and where I made an offer) is where the seller’s inspection was done by the same guy I had used two or three times before, and who I trusted.
So from a buyer’s perspective, I disagree with you that there’s something fishy or suspect about the seller not having obtained a pre-inspection. I think it just reflects a de facto recognition that from a smart buyer’s perspective, it’s irrelevant, because they’ll get their own anyway.
Jeff
at 11:09 am
I’m going to have to agree with the other posters. I’ve purchased a number of houses in Toronto and every time I visit a property and see an inspection report I will thumb through it briefly but not pay it too much attention. There are far too many unscrupulous agents, inspectors, and sellers that put money above anything else. I’ve even spoken to agents who have told me that they have “special” inspectors who they use when they want a favourable inspection. Not ethical but it happens every day.
Geoff
at 11:21 am
Hello fellow posters – You know I think we’re missing the point of this posting – most people you’re right probably won’t care that much about it. But for some buyers – maybe THE ONE – it might. And spending $400 on a home inspection on a house listed at $1.2M doesn’t seem too egregious. Just like some people would buy a muddy car, there’s going to be some people turned off by a dirty car that might buy if the owner just ran it through a $5 car wash first. Particularly if there’s going to be a bidding war, and let’s say you get to the party late and have to put in an offer that day. That might help a lot, and unlike saying decluttering or other stuff, at least on this one you don’t have to do any labour to make it happen, just a phone call.
Joe Q.
at 12:39 pm
David — I recall hearing a story from a couple of years ago where a pre-sale home inspection, paid for by a potential buyer, turned up evidence of a major termite infestation (this was in Little Italy if memory serves). The buyer’s agent then informed the listing agent of this and there was apparently then some reluctance on behalf of the listing agent to share the info with other potential purchasers.
Can you comment on the duty of listing agents to disclose known problems with a property that turn up during a pre-sale home inspection, whether the inspection is paid for by the seller or the buyer?
Greg
at 1:17 pm
I, myself, almost all the time shy away from properties with pre-sale
inspection report provided by the listing agent or the seller. If I have to get the property inspected, it’ll have to be from an indepenndent inspector of my choosing who owns more advanced and invasive equipment. Years ago when i bought my first house, got my home inspection done by someone referred to me by the l/a. His report stated that the repairs would be less than 1000. It ended up costing me close to 100k, from the roof, to the electrical wiring, to the plumbing…i therefore can never place my trust on the inspection reports conducted by the listing agent’s inspector.
Geoff
at 9:40 am
@ Greg – how do you use invasive equipment on someone else’s house?
Izzy Bedibida
at 2:47 pm
I recently got caught up in a bidding war for a small Royal York bungalow that my wife fell in love with. We had one of the better offers, but the sellers strongly suggested that we remove the home inspection clause from our offer. Sellers agent told our agent that sellers had a home inspection done and that everything was fine. It was never shown to my agent, and we subsequently walked away from the deal.
What were they trying to hide, if they demanded that we remove the home inspection clause from our offer?
Why did they not show their inspection report to our agent?
What did his report say?
Are these actions legal and ethical?
Overall I will look at the sellers home inspection report, but I want my home inspector to produce the final report that I will base my final buying decision on.
JoBu
at 3:26 pm
Agreed w Davie.
In addition, there are 4-7 “go to” home inspection agencies in Toronto, all of which are very reputable. I am sure ‘it’ happens, but really its rare.
Call the inspector, swing by his office and have a chat. Feel him out about the report, and read online reviews of theinspector and also ask around. It’s common sense.
You can also find the ‘shady’ inspection firms pretty easily. Google them, read some msg boards online.
C’mon people, smarten up!!
jeff316
at 4:10 pm
Well said. You’re a consumer spending hundreds of thousands on something. It’s not hard to take steps to protect yourself. Do some research before hand. Look behind the dishes in the cupboard, check the baseboards, look at the corners and closet ceilings, do a circle check of the foundation twice. Always start in the basements – that’s weird you find the weird stuff and if you go there last you’re likely to be too dazzled by the top floors to notice. Do your homework on the reputable agencies. Understand what is involved in a home inspection.
It’s not feasible to have a warranty or guarantee behind a visual inspection. There’s this weird, infantile mentality that sometimes pops up with some buyers, that competition, sketchiness, distrust only goes one way. Buyers are pure, sellers are shady. They think they’re advocating that consumers need to be protected from every potential pitfall of buying a home, when really what they’re advocating for is measures to make up for their own laziness, indecision, or lack of control. I’m probably the leftiest poster on here but even I think we have to take some responsibility for ourselves. If you can’t, that’s ok, just rent instead.
Darren
at 4:18 pm
“They think they’re advocating that consumers need to be protected from every potential pitfall of buying a home, when really what they’re advocating for is measures to make up for their own laziness, indecision, or lack of control. I’m probably the leftiest poster on here but even I think we have to take some responsibility for ourselves. ”
Lazy? Relying on documentation from the seller is lazy. I think insisting on your own inspection is being “responsible for yourself”.
I’m a bit confused by what you’re saying. Are you advocating doing the inspection yourself?
I can’t speak for others, but I’m about as “hands on” a consumer as you’ll find. As well as getting an inspection, I’ll be personally and intimately involved in it. Shit does happen, but I’ll do everything in my power to minimize the risks.
ScottyP
at 6:50 pm
@Darren,
I think what jeff was saying was that so many buyers are *not* willing to do the due diligence needed to take responsibility for their own inspections. On-line reviews are merely one way — though I agree that it’s the least reliable method of the lot.
Just as you said, relying exclusively on documentation from the seller is lazy. I would argue that jeff, based on his post, feels the exact same way.
jeff316
at 11:56 am
I don’t disagree with either your post above or ScottyP’s but my point is broader. (Or maybe just obtuse. Ha!)
Buying a home is a situation fraught with uncertainty. So it is natural for consumers to rely on the few structures (laws, professionals, codes of practice, etc.) and tools (research, inspections, clauses, etc.) we have to feel more secure and better inform our actions.
Risk is an inherent part of buying a home. These structures and tools can’t eliminate risk – they can only a) better inform our choices or b) affect our emotions (aka peace of mind).
A home inspection is 30 percent a and 70 percent b. It is so surface that unless you’re buying a house ripped to the studs, it really cannot reduce your risk to any meaningful degree. It’s an emotional tool.
But there is an over-reliance on these tools and structures without thought to their purposes, limitations, implications. Too often in the comments on this blog respondents make these broad, lazy assumptions about these structures and tools, almost always to the detriment of sellers and to the benefit of buyers.
We make these assumptions to paper over the inherent risks of buying a home, to give legitimacy to (and absolve ourselves of the risks associated with) the limits we all place on our due diligence. Because let’s face it, we all have limits on what we’re willing to do.
Relying exclusively and unquestioningly on documentation from the seller is lazy. Dismissing documentation from the seller simply because it is from the seller is just as lazy. Assuming an inspection gives a comprehensive assessment of the state of the house is lazy. Calling for a warranty or guarantee system from a visual inspection of a resale property is lazy. Relying on the suggested cost ranges for renovations is lazy. Statements to the effect of suggesting there are far too many unscrupulous agents, inspectors, etc. are lazy. Assuming that a buyer-hired inspector is any more impartial than a seller-hired inspector is lazy.
This happens all the time on this board. Don’t get me started on the posts here on multiple offers. Everyone else to blame for everything. Except individual buyers.
So, to that extent, what I’m saying is that we have to grow up a bit, lose the juvenile ‘everyone is bought but me’ shtick, and be comfortable with the individual level of due diligence we’re willing to do.
And if we can’t do that without impugning the other side of the transaction to make ourselves feel better, then maybe renting is a safer option.
ScottyP
at 6:59 pm
Good post jeff. Food for thought.
Darren
at 4:10 pm
There are many fake reviews online. Perhaps I don’t have the time to talk to the inspector or he doesn’t have time to talk to me? Maybe he’s a nice guy but still crap at his job? Maybe he’s as crooked as they come but has yet to be found out? Or perhaps he’s good at his job and his glowing report is accurate. But if you’re spending half a million, a million or more then what’s a few hundred for a little extra peace of mind?
Perhaps you can afford to be so cavalier, but I cannot. I don’t need to “smarten up” on this issue.
Devore
at 2:14 am
I have to agree with most comments here. I would never trust a seller’s home inspection. But, it is good marketing, and a way to bring more potential buyers to the offer table, a move that could easily more than pay for itself.
It is not about the inspector’s reputation, or how thorough the job was. There is more to the house inspection than a report. You spend the better part of the day WITH the inspector, and go through all the house components and mechanicals. A good inspector will be able to ballpark repair/replacement costs and timelines. You want to be there to ask them questions, follow up on things they find interesting or curious or out of place, things that will never make it to any report, for the buyer or seller.
Rob
at 12:05 pm
I am a certified, accredited and insured Home Inspector and I would not put my reputation on the line for anything and anybody.
My job is to find possible issues with the house in question and that is what I do. A buyer would definitely benefits form a home inspection, in fact a $400 home inspection is the only thing in the world that may help buyer find out that the $1,000,000 house he wants to buy has issues.
There are agents and probably inspectors who would close their eyes to sweeten pout a deal. No matter if they like it or not their license is in danger.
Choose a reputable home inspector every time you do a real estate transaction – they’re the best investment you’ll ever do towards the house you planning to buy.
Gary Rose - CMI
at 10:34 am
Dear all,
As a Certified Master Inspector based in Alberta, I can tell you this, licencing of inspectors in Alberta has made no difference whatsoever. In fact, its made it worse! Before 2011 you had the odd few guys doing inspections – some were good, some were poor.
Now, anyone can do a 12 week course and become an inspector with absolutely no previous experience or qualifications whatsoever! There is something dramatically wrong when in Alberta you have to attend college to learn how to cut hair for at least 2 years, but to examine and write reports on $500,000.00 transactions its 12 weeks maximum! How ridiculous is that?
So now we have guys running around Alberta completing 2 hour useless inspections – sweetening them for unscrupulous Realtors at 3 a day at $450.00 a pop! All these being completed by people who now have the blessing and a licence from Service Alberta after just a 12 week crash course!
There are currently, firemen, police officers, garbage collectors, meat butchers, realtors, laborers – all operating with a licence currently in Alberta – all 12 week approved!
My only advice to anyone currently thinking of buying a property within CANADA is this, HI does not just stand for Home Inspector – it also stands for ‘HIRE INDEPENDENTLY’ check reviews on Google ask friends or family, but above all, never never hire a Home Inspector from a Realtor who suggests only ONE inspector, if that Realtor offers you several business cards or brochures regarding inspectors – then fair enough – even then do your homework as to who they are and experience.
Check out our consumer tips when looking to hire a Home Inspector – its FREE and could save you thousands of dollars and lots of heartache!
http://www.sherlockhomesinspectors.com/hiring.htm
If anyone has potential questions regarding Home Inspection, or need advice about a Home Inspection report they have had completed – Good or Bad – please feel free to give us a call: 403-404-1514
Cheers for now….
G Rose – CMI
Michael
at 2:52 pm
Hello, I am a home inspector from Quebec and I belong to Internachi Home inspection Association in Quebec, & the US. I have no relation to the industry in Ontario what so ever. You have to realize something if someone say’s a Pre-inspection has been done fine. This is for the seller to ensure they have the least amount of issues with their home when selling, by initiating repairs and also remove some of the delays and also being able to ask for a higher selling price. This also helps with determining a realistic market price. All you have to do is ask for a copy, One, if they don,t produce it, finish the tour and leave, Normally they (the sellers) and agent would welcome a buyers Inspection,your inspection will confirm repairs and that they were done correctly. You also have the contractors bill for the repairs, which means you can verify the contractors work, get references and verify them,It would be hard to have that many people colluding together. You have to understand if someone is saying they had a pre-inspection done,then giving you every excuse not to produce this information then that is a red flag that the seller and agent may be trying to hide some thing.
Never wave your right to an Inspection, if you do you are basically taking the home as is this goes for mold testing, asbestos testing ,air quality test, water testing and energy efficiency inspections.If you wave your right then you can’t blame anyone else for your negligence. If you have an agent that wants you to wave your right of inspection,tell them to take a walk and find a new one, this is someone that does not care about their clients. A real estate agent is suppose to do everything necessary & legally to protect their client as are inspectors. A good way to protect yourself is to get a reference from people that have used their services before or though people you know.If you use one inspector that is referenced through the real estate agent then there is a higher risk of a soft reporting. If you want references from your agent then ask for 3 or 4 references reason being there’s a harder chance for them to collude together, and you end up the loser. Now i am not stating all inspectors or real estate agents are all this way,there is a happily a very high number of honest agents and inspectors. When a seller has repairs done they should also ask for a report and photos of the repairs showing what was done behind the walls from the contractor,when the repair are not visible, and also request transferable warranty for the work from the contractors.
Ansar Qureshi
at 1:16 am
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Ansar Qureshi
at 1:17 am
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Jason
at 8:52 pm
What are your thoughts on when a pre-sale inspection report is available by the seller. Buyer agent requests – receives and reviews and still includes the inspection condition in the offer. In a balanced market with no other offers on the table.